MANILA, Philippines — The Department of Budget and Management denied violating procurement rules when it bidded out the P2.8-billion contract for the hosting of the 2017 ASEAN conferences in the country, saying it has full discretion in determining the rules for such processes.

The DBM-Procurement Service came under fire for classifying the contract as a procurement of goods and not consulting services, and for awarding the contract to the sole bidder, StageCraft International. The DBM insisted StageCraft has already acquired expertise for such projects, having handled the Philippine hosting of the Asia Pacific Economic Conference in 2015, and therefore will supply "goods and services."

"The procurement was designed to be most advantageous to the government," the Department of Budget and Management-Procurement Service (DBM-PS) said in a statement on Wednesday, in reaction to allegations the transaction would be "manifestly and grossly disadvantageous to government."

The events management company Event Organizing Network, Inc. (EON), which had been excluded from the bidding, accused the DBM-PS of imposing unlawful, unreasonable and restrictive requirements that ultimately favored StageCraft.

EON was unable to submit a bid allegedly because the requirements were tailor-made for StageCraft. In its letter to the DBM-PS, EON asked government to reject the sole bid, declare a failure of bidding or not to award the contract.

The DBM insists the bidding is not necessarily a failure just because only one party submitted an offer. But a source familiar with government procurement told VERA Files this does not give government the right to award the project to the lone bidder.

According to the VERA Files source who is a procurement manager, Sec.36 (b) of RA 9184 says a single calculated or rated bid can be considered for award "if after the advertisement and receiving more than one bid, there is only one bidder that met the requirement."

"Had EON submitted an offer, then the project may be awarded to Stagecraft. However only one submitted an offer and that should prevent government from awarding the project to the lone bidder," the source told VERA Files.

The gargantuan government project was bidded out as a single lot for the two leaders' conferences, three commemorative conferences, 14 ministerial and 29 senior ministers' meeting of the ASEAN.

The funding guaranteed by the International Commitment Fund of the ASEAN National Organizing Council (NOC)–Office of the Director General for Operations under General Appropriations Act FY2017 is P2.88 billion. StageCraft's bid was P1-billion.

Budget Secretary Benjamin Diokno admitted the government only wanted to deal with one contractor. He quoted ASEAN NOC Director General Marciano Paynor Jr. as saying, "We should just have one bidder."

"It's an indication that they tailor fitted the bidding to admit only one company. It's against the governing principle of government procurement Section 3(c) which is competitiveness," the source added.

Citing the Non-Policy Matter Opinion No. 180-2015 issued by the Government Procurement Policy Board (GPPB), the DBM-PS said as the procuring entity it was in the best position "to determine, based on its primary purpose, motivation and intention, and on the nature of the contract, whether the intended Project should be classified as goods or consulting services."

DBM-PS used Public Bidding Documents (PBD) for "goods" for the conference-related services required for 48 major meetings from January to December 2017. Bids for the procurement of goods and infrastructure require an abbreviated process under Section 32 of the law. The Bids and Awards Committee (BAC) only evaluates the financial component of the bids. From the preliminary examination the "Lowest Calculated Bid" is already determined.

The contract was bidded out as "Technical and Conference Integrator for the Hosting of 2017 ASEAN Meetings." Under the Government Procurement Reform Act (GPRA) Implementing Rules and Regulations (IRR), "Technical and Conference Integrator" falls under consulting services, which involves a longer process and requires an evaluation and ranking of the bids, among other steps.

The DBM-PS argued that the terms of reference (TOR) of the contract involve rental of equipment and rendition of services and specifically required the integrator to render design services, supply goods and furniture, and even construction of specific requirements.

The contract does not require any purchase of goods but a thorough review of the TOR would reveal that 86 percent of the requirement is actually lease or rental of equipment. The DBM-PS argued this condition does not fall under consulting services.

"The title of the bidding/contract does not determine the requirements of the contract," the DBM-PS statement read.

Both APEC 2015 and ASEAN 2017 hosting requirements were for "Technical and Conference Integrator" but APEC 2015 was bidded out as "consulting services" while ASEAN 2017 as "goods." StageCraft International bagged both contracts.

"These bidding parameters are decided in lengthy discussions between DBM-PS and ASEAN-NOC prior to advertisement in which time bidders are unknown and could not have deliberately excluded or favored anyone. It is thus categorically denied that the procurement of the requirement as Goods was decided whimsically and arbitrarily," the DBM statement read.

DBM-PS explained that in the APEC 2015 hosting, expertise of consultants was needed while in ASEAN 2017, organizers need only goods and support services.

The APEC 2015 hosting was also bidded out as consulting services because the previous hosting of APEC was held more than a decade ago, and in a much smaller scale, that the expertise of consultants was then required to accomplish the tasks necessary. But for the 2017 ASEAN Conferences, the organizers have already acquired the expertise in hosting events of this nature, as in fact it has just been two years since APEC 2015.

"Another paramount consideration in hosting the 2017 ASEAN Meetings should be given to the security, safety, and comfort of the Heads of State who will attend the momentous events. It cannot be overemphasized that given the circumstances under which the reins for this event had been handed over to the current administration, time is of the essence, and we are in short supply. It is imperative that preparations should already be well under way at this point, bearing in mind the sheer magnitude and significance of these events," the statement concluded.

The Philippine hosting of ASEAN 2017 will kick off in a ceremonial launch in Davao City on January 15. Two senior economic officials' meetings will follow later this month also in Davao.

Two ministerial-level meetings will take place in February, the ASEAN Ministerial Retreat in Palawan and the ASEAN-China Joint Working Group on the Implementation of the Declaration of the Conduct of Parties in the SCS and ASEAN-China Senior Officials Meeting in Boracay.

VERA Files is put out by senior journalists taking a deeper look at current issues. VERA is Latin for "true."

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